In a backdrop of economic uncertainty, a hawkish Federal Reserve, and lackluster performances in both the bond and equity markets, many pundits and macro-oriented analysts had been pessimistic about the cryptocurrency market. However, the tides seem to be turning, as Bitcoin, the flagship cryptocurrency, staged a significant breakout recently, rekindling hopes for a rally towards the $100,000 mark.
Despite these bearish sentiments and the ongoing speculation, Bitcoin enthusiasts were optimistic about the cryptocurrency’s potential. The latter part of 2023 has seen Bitcoin maintaining levels 30% to 100% higher than the previous year’s close. This surge has led some to question the validity of labeling it a bear market, given the significant gains.
The breakout that everyone was waiting for finally occurred on Monday, October 23, when Bitcoin shattered its previous 2023 high of $31,800. On that day, Bitcoin surged by nearly 10%, marking a major breakthrough. Now, the big question is, does this signify the beginning of Bitcoin’s long-anticipated journey to $100,000, or is it merely a precursor to another period of range-bound trading or a return to a bear market?
Before diving into the prospects, it’s essential to heed a crucial warning. The Elliott Wave theory, a primary tool for analyzing the market, should be seen as a means of assessing risk versus reward. It’s essential to be prepared for controlled losses in trading. If critical levels are breached, traders must be ready to adjust their positions or plans accordingly.
Addressing the Bearish Scenario:
To address the bearish scenario, it’s crucial to acknowledge that not all breakouts succeed. However, the likelihood of failure in this instance appears to be slim. Nonetheless, it’s vital to monitor specific levels to gauge potential risks. A significant level to watch is $26,530. A breach of this level could result in a return to the six-month consolidation range, and potentially even a dip below the $25,000 range. Although this might not signal a return to the bear market of 2022, it could open the door to further challenges, with a possible target of $18,900.
Furthermore, before a more bullish sentiment can be solidified, it’s important to see Bitcoin form five waves before breaking above $42,000. Additionally, it needs to hold above $30,600 if a fourth wave correction begins from the current price of $34,500. A break below $30,600 could serve as an early warning sign of an impending price collapse, until the completion of the fifth wave.
The Bullish Paths:
Assuming the bears have relinquished control, two potential paths towards a $100,000+ Bitcoin are under scrutiny. The first path is a direct impulse that could propel Bitcoin towards $100,000 and possibly even $125,000. In this scenario, Bitcoin should form five waves below $42,000. Afterward, it is expected to retrace to the mid to low $27,000 range before initiating a decisive breakout from the higher low at circle-2. This should mark the start of a rapid ascent in wave-iii, reaching $80,000 or more before entering the final consolidation phase in wave iv. This consolidation could span four months, akin to the duration of wave ii before the final push towards $100,000.
The second path involves an ABC structure, indicated in red on the chart. This scenario assumes that the five-wave structure that commenced in 2018, which is nearing its final ascent, is an ending diagonal. Although this view is open to debate, confirmation of this potential pattern would occur if Bitcoin breaks above $42,000 without completing five waves. In such a case, an A-wave top in the $50,000 range is expected. If Bitcoin remains above the $19,000 region, it may proceed to execute a final push, designated as a C-wave, ultimately aiming for $100,000 to $125,000.
Considering the Upcoming Halving:
Although halving cycles have historically coincided with significant price increases for Bitcoin, it is not the sole determinant of decision-making. Bitcoin traders should instead rely on a comprehensive strategy founded on numerous data points. Nonetheless, it is worth noting that this scenario aligns with the next halving event, projected to take place in mid-2024.
In Conclusion:
While the journey to six-figure Bitcoin prices has been long-awaited, the cryptocurrency has not invalidated this notion. The year 2023 has unfolded as a slow-moving bull market, with substantial time spent in sideways movement. This sluggish pace has prompted some within the crypto community to label it as a bear market. However, if the October 23 breakout sustains its momentum, the discussion about a bear market should be put to rest as Bitcoin continues its ascent into the year’s end, with the potential to reach $100,000 in 2024.